This year, VC-backed startups could see the lowest number of exits since 2011, according to Pitchbook.
As the number of IPOs and acquisitions decline, startups might start pursuing alternative exits, such as acquisitions by blank-check companies.
The VC ecosystem depends on company exits to reward investors and provide liquidity for employees with stock options. With fewer companies filing to go public or successfully seeking out acquisitions, the pool of capital could start to dry up.
With less capital to go around, unprofitable, growth-driven startups will continue to make tough decisions about slashing costs in order to extend their runways.
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It's safe to say that 2020 has been a mixed bag for startups.
The year has seen a handful of high profile acquisitions: Lululemon bought home-exercise startup Mirror for $500 million, while Uber acquired food-delivery startup Postmates for $2.6 billion.
But data from Pitchbook about venture capital activity in 2020 Q2 tells a rather gloomy story.
In the first half of 2020, VC-backed startup exits have reaped a total value of 45.3 billion, which is less than one fifth of the $261.6 billion that venture-backed companies racked up from their exits for all of 2019. If exits continue at the same pace this year, they will fall far below the 2019 total.
Just 147 startups pulled off an exit in 2020 Q2, at a total value of $21.2 billion, according to Pitchbook.
This total pales in comparison to 2019's Q2, which was the best quarter ever for VC-backed startup exits: 383 startups exited for a record total value of $138.3 billion, per Pitchbook.
It's hard to compare 2019, which saw a number of high profile startups like Uber, Pinterest, Slack, and Zoom go public at sky-high valuations, to 2020, which so far has seen VC-backed startups lay off thousands of employees, and hot startups like Airbnb slow down their IPO plans.
If exits don't start to pick up soon, Pitchbook projects that 2020 will be the year with the fewest VC-backed startup exits since 2011, when 742 startups exited at a total value of $67.3 billion. However, 2020 doesn't seem headed for the same low points touched in 2008 to 2010, in the aftermath of the financial crisis, according to Pitchbook. And the firm said an uptick in IPO filings at the end of the first half of 2020 might be a positive sign.
With fewer exits on the books, some VC firms might find themselves strapped for cash. However, fundraising has remained robust for larger funds, per Pitchbook.
The economic situation in the United States remains precarious in 2020. As coronavirus cases and deaths continue to surge across the United States, there is a good chance that many schools will remain closed, which could seriously hinder startup workers and founders with children. Without open schools, many other US workers will have to stay home, with ripple effects on employers and the economy. And if a second wave of coronavirus strikes the US, stocks could plunge 20-30%, as Business Insider's Ben Wink has previously reported.
Startups are responding to the unprecedented economic conditions in a number of different ways.
Some companies have taken advantage of the brewing coronavirus recession by buying up smaller startups at rock-bottom prices. Financial technology startup Brex, for example, acquired three startups in March 2020, just before raising $150 million at a $3 billion valuation and laying off 17% of its staff in May.
The coronavirus pandemic could also accelerate a movement of startups seeking to exit by selling to shell companies known as SPACs, which are sometimes called blank-check companies. Hims, the hair loss treatment startup that has received funding from Peter Thiel's Founder Fund as well as from Redpoint Ventures and SV Angel, is reportedly negotiating a deal with a SPAC, per Reuters.
SPACs, which usually perform better during market downturns, make it possible for startups to bypass the administrative headache of going public while also getting liquidity in the hands of the startup's early investors and early employees.
The VC ecosystem depends on exits to achieve liquidity, and with fewer companies filing to go public or successfully seeking out acquisitions, the pool of available capital could start to dry up if the economic decline becomes extended. Venture capital firms need to demonstrate that they can provide a good rate of return for their limited partners, who are the investors in VC funds.
Some VCs have encouraged their portfolio companies to extend their runway, which is how much cash a startup has in the bank to fund its operations, for up to 3 years. It seems likely that startups will continue to do this by slashing headcount, slowing down growth, and reducing other overhead costs, like sky-high rents.
If the gloomy forecast for 2020 startup exits comes true, then VCs, who have poured billions into unprofitable startups like Uber and Airbnb in their pursuit of growth, may have to switch gears and focus on profitability.
And if unprofitable startups start to run out of runway and fail to raise additional funds, they might become some of the first causalities of the worst recession in the US since the 1930s Great Depression, which lasted a decade. Join the conversation about this story » NOW WATCH: How 'white savior' films like 'The Help' and 'Green Book' hurt Hollywood
Real estate tech company Snapdocs today revealed that it has raised $25 million in series B funding to further develop its products and platform.Coinciding with the news, the San Francisco-based company announced the opening of a new office in Denver, Colorado.Snapdocs said the new office would serve as a center for a “wide variety” of roles, with an emphasis on engineering and operations.(Among previous backers are Y Combinator and SV Angel.)“This is a huge [achievement] for the Snapdocs team and toward delivering on our promise of a seamless digital real estate closing,” said CEO Aaron King, who founded Snapdocs in 2013.“We do this for [our customers], and this capital enables us to continue to scale our world-class team so we can build the technology you need to thrive in a digital age.”
What’s worse, why the sophisticated AI tool is locked inside the walls of a few billion-dollar tech companies, is no longer available.Today we are officially introducing Determined AI, which enables AI engineers everywhere to focus on models rather than infrastructure.Determined AI supports this:GV (formerly Google Ventures),Extend partners, CRV, Haystack,SV Angel, The House, and Specialty Types.We are in the dark age of AI infrastructureAI and especially deep learning (DL) is becoming a very important computational workload for all types of businesses and industries.For example, DL has dramatically improved the performance of autonomous vehicles at Waymo; Siri, Apple’s personal assistant who communicates through speech synthesis; And this has revolutionized Facebook’s ability to understand user sentiment.Everyone has to do with existing tools, which are not bad for AI-based application development, as this example differs from traditional software development.Consequently, organizations that rely on advances in AI — for anyone who works with vision, speech, or natural language — can mitigate risk without a radically new approach to AI infrastructure.Our focus:At Decisive AI, our goal is to empower deep learning at the speed of thought.We started from the problems faced by DL researchers today and worked backward to provide a dramatically easier, seamless, integrated environment than traditional tools.Fully Interoperable:Determined AI frees your DL investment from the risk of cloud or hardware lock-in.
Data privacy for apps is typically part of the purview of compliance teams — a model that isn’t always perfect, judging by the number of breaches and the extensive regulation that’s been (and is still being) put in place to force companies and organizations to behave better.Now, in an effort to improve how apps manage data privacy, a startup called Evervault — founded by a 19-year-old in Dublin, Ireland — is building a data protection solution aimed at developers, by way of an API, which aims to bake data protection into the app from the start.“I believe that once data has been ingested, it should be encrypted and never decrypted again,” founder Shane Curran said in an interview.“There’s a philosophical argument to be made over offering privacy at different levels, but we’re looking at the holistic side of things.If your app gets breached, the data will not leak.”The investor list in this seed round is impressive, but also all the more notable when you consider that Evervault’s product has yet to be released.
Manticore Games has raised $30 million to launch a platform so a new generation of game creators can build, share, and play online games.The San Mateo, California-based company will use the money for accelerating development of Core, a digital playground and community designed to unleash imagination and explore new play experiences.The second round financing includes investments from Benchmark Capital, Correlation Ventures, Bitkraft Esports Ventures, M Ventures, Arrive (a subsidiary of Roc Nation), Sapphire Sport, Tuesday Capital, and SV Angel.“We are not ready to show it yet, but we are talking about the genesis of it.It is still reserved to a limited set of folks.A new way for creators to get into it.”
It’s often said that smaller businesses get the short end of the stick when it comes to technology solutions: they are more high-maintenance than consumers, but not as lucrative as larger enterprises, leaving them caught somewhere in an unsatisfying middle.“We’re democratizing access to a physical salesforce by aggregating all the fractionalised or partial demand into a common platform and dispersing that to individuals in the gig economy,” said Rob Frohwein — the CEO of Kabbage who is co-founding Drum with his Kabbage co-founder and COO Kathryn Petralia and Troy Deus — said in an interview with TechCrunch.The money comes from a group of investors, some of whom have previously backed Frohwein and Petralia.Deus himself is a longtime Kabbage employee whose most recent role there has been head of new venture sandbox Kabbage Labs.Backers include Propel Venture Partners (the investment arm of banking giant BBVA), Felicis Ventures, BlueRun Ventures, American Express Ventures, GroTech Ventures, Wildcat Venture Partners, BoxGroup and SV Angel.“This has the potential to dramatically accelerate new product introduction and customer acquisition for businesses.
Canada-based Dapper Labs, the company behind viral blockchain game CryptoKitties, has announced its US$11 million fundraise and Flow, a new blockchain for decentralized apps in gaming, culture, and entertainment.The investment was led by Andreessen Horowitz’s crypto fund, with participation from new investors Accomplice, AppWorks, Autonomous Partners, and Warner Music Group.A slew of angel and existing investors such as Union Square Ventures, Venrock, Digital Currency Group, Animoca Brands, SV Angel, Version One, and CoinFund also participated in the round.With the funding, Dapper Labs will work with AppWorks, a Taiwanese blockhain accelerator, to help bring blockchain technology in Asia and engage in AppWorks’ developer community, according to a statement.AppWorks claims the startups it had supported together have raised US$870 million and are valued at US$3.97 billion.It currently has 48 companies in its portfolio, including startups like KKday, ShopBack, and Carousell.
Exchanges like Coinbase have ballooned in size by taking the mechanics of equity markets and fitting them to cryptocurrency markets, but as the space expands in its scope and craftiness, new exchanges trading asset classes native to cryptocurrency are taking off and attracting the attention of top Silicon Valley VCs, oh, and Coinbase too.Blade is a new cryptocurrency derivatives exchange launching in three weeks.Prior to starting the company, CEO Jeff Byun and his co-founder Henry Lee founded OrderAhead, a delivery startup platform which was eventually acquired in-part by Square in 2017.The pair’s newest company shares little in common with their previous venture, but they are bringing aboard some of the same investors to support them.Blade is announcing that they’ve raised $4.3M in seed funding from a host of investors, including Coinbase, SV Angel, A.Capital, Slow Ventures, Justin Kan and Adam D’Angelo.The exchanges is tackling perpetual swap contracts.
Over the next two election cycles the two would become parts of an organizing and fundraising team that transformed the business of politics through its use of technology — supposedly laying the groundwork for years of Democratic dominance in organizing, fundraising, polling and grassroots advocacy.What had worked for the Democratic party in 2008 and 2012 wasn’t going to be effective in future election cycles, so they created the investment firm Higher Ground Labs to provide financing and a launching pad for new companies serving Democratic campaigns and progressive organizations.“Democrats are spending on average 70 cents of every dollar raised on television ads.If we want to activate and engage an enduring majority of voters we have to go where they are (and that’s increasingly online) and we have to adapt to be able to have these conversations wherever they are.”Social media and the rise of “direct to consumer” politicsWhile the Obama campaign effectively used the Internet as a mobilization tool in its two campaigns, the lessons of social media and mobile technologies that offer a “direct-to-consumer” politics circumventing traditional norms have, in the ensuing years, been harnessed most effectively by conservative organizations, according to some scholars and activists.
Today, its founders are back with their second act: An AI-enabled assistant called Navigator meant to help teams work and communicate more efficiently.With the support of $12 million in Series A funding from CRV, Angels, Designer Fund, SV Angel, Dropbox’s Drew Houston and other angel investors, Aspen, the San Francisco and Seattle-based startup behind Navigator, has quietly been beta testing its tool within 50 organizations across the U.S.“We’ve had teams and research institutes and churches and academic institutions, places that aren’t businesses at all in addition to smaller startups and large four-figure-person organizations using it,” Mailbox and Navigator co-founder and chief executive officer Gentry Underwood tells TechCrunch.It launched in 2013, as mentioned, to quick success.At the time, Apple’s App Store was much newer and there were few available options for mobile email, especially ones that prioritized design and efficiency, as Mailbox did.“There were still a lot of opportunities for improvements for how email was being used on these tiny little devices.”
Almost every organization, regardless of size, is inundated with meetings, so much so it’s often hard to find dedicated time do actual work.Clockwise wants to change that by bringing machine learning to the calendar to help employees free up time.Today, it announced an $11 million Series A investment, and made the product, which had been in Beta, generally available.The round was co-led led by Greylock and Accel .Other investors included Slack Fund, Michael Ovitz, Ellen Levy, George Hu, Soraya Darabi, SV Angel and Jay Simons.Matt Martin, CEO and co-founder at Clockwise says the company’s mission is to help employees make time for what matters, and they are doing that by applying machine learning to the calendar to free up blocks of time to concentrate on work.
More than a third of U.S. workers — about 57 million people — are part of the so-called gig workforce, according to a recent Gallup poll.In fact, it’s estimated that on-demand jobs add $715 billion to the economy annually and that the contractor market exceeded $3.7 trillion globally in 2017.Business is booming for intermediaries who connect gig workers with employers, including a relatively new entrant, Instawork.The San Francisco-based Y Combinator alum, which targets the hospitality sector, has been quietly expanding in the Bay Area, Los Angeles, and San Diego for the better part of four years.Instawork told VentureBeat that it secured $18 million in a funding round led by Spark Capital, GV (formerly Google Ventures), and Burst Capital, with participation from existing investors Benchmark, Y Combinator, Tuesday Capital, and SV Angel.This brings the startup’s total raised to nearly $30 million and will result in Spark Capital general partner Nabeel Hyatt joining its board of directors.
Quadric.io, a startup founded by some of the folks behind the once-secretive bitcoin mining operation “21E6,” has raised $15 million in a Series A round that will fund the development of a supercomputer designed for autonomous systems.The round was led by automotive Tier 1 supplier DENSO and its semiconductor products arm NSITEXE, which will also be one of Quadric.io’s customers for future electronic systems in all levels of autonomous driving solutions.Pear, Uncork Capital, SV Angel, Cota Capital and Trucks VC are seed investors in Quadric.io.The roots of Quadric.io grew from a seemingly disconnected mission to produce an agricultural robot designed to transform the way vineyards were managed.The company launched in 2016 by CEO Veerbhan Kheterpal, CTO Nigel Drego and CPO Daniel Firu — all co-founders of 21 Inc.The bitcoin startup, once known as 21E6, would later rebrand as Earn.com before being acquired by Coinbase for $100 million.
A new report from CB Insights showed SV Angel and Y Combinator as the top seed-stage and Series A investors in billion-dollar startups.Of the top five firms with early investments in "unicorn" startups, three invested in home rental startup Airbnb and grocery delivery service Instacart, both of which are rumored to go public in 2019.A unicorn typically refers to a privately-held tech startup that is valued at or above $1 billion.With Uber,Lyft, and Pinterest now public companies, all eyes are on other billion-dollar businesses in the IPO pipeline.The CB Insights report lays out which investors have staked early claims in the elite group of "unicorns"— startups valued by private investors at $1 billion or more — with SV Angel coming out on top with 18 unicorn feathers in its proverbial cap.SV Angel's stake in Airbnb is not publicly disclosed, but according to Pitchbook data, the firm would have bought shares at $0.42 each in the round, meaning it's likely to turn a big profit if and when Airbnb IPOs.
Quadric, a Burlingame, California-based startup developing a custom-designed chip and software suite for autonomous systems, today announced that it has raised $15 million in a funding round led by automotive components manufacturer Denso, which plans to integrate Quadric’s technology into its autonomous driving stack.Pear, Uncork Capital, SV Angel, Cota Capital, and Trucks Venture Capital also participated.“We’re developers ourselves and have seen the shortcomings of existing technologies for real-time edge computing — we’re building the Quadric platform to address this and unlock new capabilities that will accelerate development of autonomous systems,” said Quadric CEO and cofounder Veerbhan Kheterpal.“Quadric is the next step in the virtuous cycle of better platforms enabling better algorithms, leading to better app engagement that in turn drives better innovation.”Quadric — which was founded in 2016 by Veerbhan, Nigel Drego, and Daniel Firu, who hail from MIT and Carnegie Mellon and previously cofounded cryptocurreny computing company 21 — claims its full-stack edge computing solution can support “near-instantaneous” decision-making and that early testing has shown up to 100 times lower latency and a 90% reduction in power consumption.The architectural details remain a bit fuzzy, but Quadric says its hardware relegates AI workloads to a custom accelerator chip — the Quadric Processor — and integrates with most existing sensor sets in a plug-and-play fashion.
Aaron Patzer launched Mint to help consumers organize their finances.Now he’s raised $5.2 million from investors to launch Vital to bring that consumer-focused mindset to emergency rooms and hospitals to help them organize patient flow.Patzer co-founded the company with his brother-in-law Justin Schrager, a Doctor of Emergency Medicine at Emory University Hospital.The serial entrepreneur invested a million dollars and two years of peer-reviewed academic study and technical research and development to create Vital, according to a company statement.Alongside angel investors Vivek Garipalli, the chief executive of CloverHealth and Nat Turner and Zach Weinberg, the founders of Flatiron Health, these investors are hoping that Patzer can repeat the magic he brought to financial services in the healthcare industry.“The HITECH* Act was well-intentioned, but now hospitals rely on outdated, slow, and inefficient software – and nowhere is it more painful than in the emergency room,” said Patzer, in a statement.
After dropping its IPO filing two weeks ago, today Pinterest, the social media platform where people can discover and share ideas and content through grids of “pinned” images, filed an updated S-1 where it set the price range at $15-17 per share for a sale of 75 million shares.At this range, the company will raise between $1.125 billion and $1.275 billion, valuing Pinterest at $9 billion at the higher end (or $9.19 billion if you add in the greenshoe, which would raise $1.466 at the top end if the full allocation is taken).In social media Pinterest competes against the likes of Facebook for sharing ideas and links, and in e-commerce it also a plethora of competitors, including Amazon, eBay and more.The San Francisco-based company will trade under the ticker symbol “PINS” on the New York Stock Exchange.In the original S-1 it revealed that it had revenue of $755.9 million in the year ending December 31, 2018, up from $472.8 million in 2017.It has roughly doubled its monthly active user count since early 2016, hitting 265 million late last year.
Hello Alfred — the startup that assigns in-home assistants to take care of your recurring chores and tasks — has announced the launch of a new service tier that will provide more properties and residents with access to the company’s underlying technology.The company, which won the Startup Battlefield competition at our 2014 Disrupt event, looks to unlock valuable time for users by handling the long list of small routine items that add up over the course of a week and still require human oversight.Hello Alfred style="font-weight: 400"> partners with building owners to provide residents with dedicated home managers that assist with various errands and on-request services such as apartment cleaning, grocery delivery, laundry services, prescription refills and more.The new platform, “Powered by Alfred”, acts as a fairly similar but more accessible alternative to the company’s current offering.Residents in buildings equipped with the “Powered by Alfred” are given access to all of the company’s solutions with the exception of the weekly visits from dedicated home managers currently included in the existing service.Both residents and building owners using the new platform are also given more control and direct access to Hello Alfred’s proprietary technology, allowing users to control functions that normally fall under the purview of the company’s dedicated home managers.
The tech giant revealed it was producing original content for its Apple TV Plus streaming service, featuring some of the most notable film directors and popular actors.One was Laurene Powell Jobs, the widow of former Apple CEO Steve Jobs.The event itself took place inside an auditorium on Apple's campus that's named after the late Apple CEO.Source: Tripp Mickle on TwitterVenture capitalist Ron Conway, who founded the investment firm SV Angel, was seen walking toward the Steve Jobs Theater.Lots of celebrities came on stage to introduce their new shows that would appear exclusively on Apple TV Plus.
Last month, we reported that Opendoor — the startup that is taking on the real estate industry with its own platform for buying up homes and selling them on to interested buyers — filed to raise $200 million on a $3.7 billion valuation.The company has raised an addition $300 million, and sources close to it tell TechCrunch that the valuation is now at $3.8 billion.This latest round was led by previous investor General Atlantic, with participation also from Hawk Equity, the SoftBank Vision Fund, Access Technology Ventures, Lennar Corporation, Fifth Wall Ventures, SV Angel, Norwest Venture Partners, NEA, GGV Capital, Khosla Ventures, and GV.Opendoor’s funding underscores a couple of big themes.That is to say, the housing market — despite some huge dips resulting either from wider economic tides, or simply scandalous mismanagement around, for example, sub-prime lending — continues to be a major draw not just for investors but also consumers.“Our business is designed to operate in up markets, down markets and flat markets,” co-founder and CEO Eric Wu said in an email to TechCrunch.